Commodities

Crude oil falls on fears of US debt default

PTI Singapore | Updated on March 12, 2018

Oil prices edged lower in Asian trade today as the United States faces a potentially devastating sovereign debt default after Senators failed to end a budget impasse.

New York’s main contract, West Texas Intermediate for delivery in November, was down 26 cents at $101.76 in mid-morning trade, while Brent North Sea crude for November delivery eased 20 cents to $111.08.

Investors are keeping a close eye on the US Senate as it tries to work out a deal to reopen the federal government and raise the country’s borrowing limit before an October 17 deadline.

The government shut down on October 1, a move that has since damaged domestic confidence and undermined America’s reputation as the world’s leading economic superpower.

Harry Reid, Democratic Leader in the Senate, painted an optimistic picture of a dialogue yesterday with Republicans — represented by top Senator Mitch McConnell — though nothing concrete was disclosed.

“I’ve had a productive conversation with the Republican leader this afternoon, our discussions were substantive, and we’ll continue those discussions,” Reid had said. “I’m optimistic about the prospect for a positive conclusion.”

Failure to lift the debt limit by this Thursday would mean the government is unable to pay its bills or service its debts, as it only has $30 billion in hand to meet the obligations that can run to $60 billion a day.

“With only three days to go before the US tips over the soft deadline of its debt ceiling, progress on Capitol Hill seemed to come to a standstill,” Desmond Chua, market analyst at CMC Markets in Singapore, said in a note.

“The ball is now thrown back into the Senate’s court, with market watchers hoping that less conservative Republicans in the Senate will support a longer debt limit extension with no conditions attached,” Chua added.

Published on October 14, 2013

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